Property giant Hammerson is on bid alert after rumours swirled that private equity firm GE Real Estate is teaming up with French property giant Unibail to launch a break-up bid.

Its shares have surged by nearly 15 per cent in little more than a week to close at 1744p on Friday, a record high.

Analysts say that Hammerson is a logical bid candidate for Unibail as France accounts for about a quarter of the British firm's £7bn portfolio. Like Unibail's, its French assets include shopping malls and prime Paris office space. Traders speculated that Unibail was sounding out GE Real Estate in order to sell on UK properties that it would seek to divest.

City sources say that if bidders pounced, offering around 2000p a share, it would be difficult for Hammerson's management to turn down. The firm's chairman is John Nelson, the former Lazard banker, while the chief executive is John Richards. The head of GE Real Estate is a Frenchman, Olivier Piani.

A fortnight ago, Merrill Lynch said it had bought over 14 million shares, or 5 per cent of the company. Morgan Stanley has boosted its stake to 5.2 per cent. Other big shareholders include Legal & General.

Hammerson said it doesn't comment on 'market rumour or speculation', but only a month ago Richards indicated that no discussions were taking place. Some analysts believe that other predators, such as British Land or Westfield, could be circling.

Recently, Hammerson added its voice to warnings that the upward trajectory in property valuations had possibly run its course. But the shopping centre and City office-block owner said it planned to hike its dividend by 25 per cent and invest in a £5bn development programme.

Two-thirds of the rise in the worth of its properties last year was due to soaring capital values, which had the effect of pushing yields lower. Yields measure rental income as a proportion of capital value.

Both British Land chief executive Stephen Hester and Ian Coull, chief executive of Slough Estates, have inferred that the yield shift has probably come to an end.

Hammerson is in the middle of redevelopments of the Broadmead shopping centre in Bristol and a city-centre scheme in Leicester. Last year, it spent £427m on a portfolio of five retail parks.

The company said it had outperformed the UK commercial property market as a whole, measured by the Investment Property Databank index, in nine of the past 10 years.

Last year, Hammerson ruled out a break-up, saying there was no pressure from investors to split the business into retailing and office operations.